Korea’s Carriers Can’t Wait — Literally — for Samsung’s New Phones

South Korean cellphone carriers have started to sell Samsung Electronics’ latest flagship phone weeks ahead of the official launch, in a strange development that underscores the fierce competition in the home market of the world’s biggest smartphone maker.

Samsung’s Galaxy S5 smartphone and Gear Fit smartwatch are on display at a retail shop operated by SK Telecom in Seoul.

Min-Jeong Lee/The Wall Street Journal

Samsung last month unveiled the latest installment of its Galaxy premium smartphones, the S5, which comes equipped with a fingerprint sensor and boasts features such as water resistant protection, a larger 5.1-inch screen while supporting faster downloads than the S4.

Though Samsung set the Galaxy S5’s global launch on April 11, mobile phone carriers in its home market appear to have jumped the gun, with SK Telecom—the nation’s biggest—selling the device beginning Thursday at its 3,000 nationwide stores.

Quickly to follow was rival KT, which said it too would start selling the S5 phones to select customers, from Friday. A KT spokeswoman blamed rival SK Telecom for launching the phone early, forcing the company to immediately match the move.

Samsung said it was “perplexed” by the move for an early launch in Korea and that the company will decide on how to deal with the situation later, but said it has no plans to alter the Galaxy S5’s global launch date.

The sudden race to launch Samsung’s latest smartphone is an unintended consequence of a government action intended to punish South Korea’s three carriers for giving out too much in handset subsidies, which sometimes account for over 50% of the phone’s price, in a race to win customers.

The nation’s government discourages over-subsidizing phones because it believes the activity leads to “unfair” contract deals and creates confusion in the market.

The government ordered the country’s three mobile carriers to take turns suspending sales of new phones for a 45-day period each between March 13 and May 19, during which only one carrier is allowed to sell new phones. Among the operators, KT is currently in the third week of its 45-day penalty, while SK Telecom’s will start April 5.

That means SK Telecom won’t be able to sign up new customers with the Galaxy S5 for the first 39 days of the phone’s official launch, a huge setback for the company as sales of Samsung phones in South Korea usually dwarf those of any other brand.

“The release (Thursday) was to provide a wider pool of choices for customers before the operations ban,” said a SK Telecom spokeswoman.

KT, though already serving its penalty period, said the new Samsung phone would be available for customers who meet certain conditions such as those with broken or malfunctioning phones. It is offering a 50% discount for Samsung’s new smartwatch, the Gear Fit, for select Galaxy S5 customers.

Samsung said it did provide some shipments to support the preorders and marketing activities by the three local carriers but the release (on Thursday) was on their own.